Some folks are incensed at the level of wage inequality that emerges in a private market order. That inequality emerges ought not surprise anyone. Workers earn wages (actually compensation) commensurate with their ability to produce valuable goods and services and their firm’s ability to sell those things. If you want a fancy term for this, we understand that compensation is equal to the marginal revenue product of labor.
Of course there are many frictions in markets that could lead to workers being paid less than what they produce (just as there as outcomes where they are paid more). But that does not change the fact that workers with different “skill” levels end up receiving vastly different compensation packages. I put skill in quotes because I use the term to reflect “ability to produce things consumers want” as opposed to the more traditional interpretation as being of high competence in some craft. For example, the creator of the jibbitz is much more highly skilled than the guy who can juggle 10 bowling pins while whistling Dixie.
That market systems would reward the most productive is obvious – and the bane of many on the left. But if people do not believe that higher productivity entitles one to higher compensation, then what is a better alternative? After all, consider how well off each of us would be if we lived entirely self-sufficient lives? The only way we could advance ourselves is to be more productive. It therefore is natural to have this be the determinant of rewards once we interact with other members of society.
So I ask, if it is not OK for some workers to earn vastly more than others in the private sector, then why is there no such consternation raised about inequality within the public sector? After all, there are hoards of government workers earning the minimum wage, just as there are very large numbers earning more than $100,000. If productivity does not matter, then on what grounds are BLS economists being paid $100,000 per year while the janitors in that same building are earning $20,000 per year? And if folks in government wish to promote wage equality in the private sector, ought not they demonstrate their brotherhood first in the public sector?
I hereby propose a new law – that any and all government workers get paid identically – and that should be equal to the average compensation of an American worker in the private sector. Furthermore, I also propose that anyone choosing to work for government not be permitted to take a second job to augment their earnings (in case it is not obvious, that is exactly how state-run medical works in some places).
UPDATE: I just found this.